THE economy will show resilient growth over the next decade, according to a new report from the economic think-tank the ESRI.
Economic growth will average 3.75% a year between 2008 and 2015, the ESRI said, though it does predict a shift in the drivers of growth from those of the Celtic Tiger era.
At the publication of its medium-term review, the ESRI’s head of research, Professor John FitzGerald, said the export of services would “take over the baton of growth in the economy”, and manufacturing and agriculture will continue to decline in importance in the coming years.
The report said that manufacturing employment and output has been slowing since 2001 and this will continue. Expansion in the manufacturing sector is only likely in “hi-tech industries where the technology involves skilled workers in the production process”, the report predicted.
The report forecasts that unemployment will hit a peak of just under 7% in 2011, before falling back gradually.
It said immigration will continue but not at the rate seen in recent years, and the growth in wages will be 4.3%.
The national debt, which stands at about €38 billion, will be cleared by 2020, the ESRI said.
Commenting on the housing market, which has helped keep the Irish economy afloat in recent years, the ESRI said about 50,000 new houses would be needed each year. About 35,000-40,000 of these would be to meet population demands, with the rest either second homes or those needed to replace existing houses.
The report said although the economic outlook in the short term was difficult, given the current financial crisis and the prospect of a US recession, looking ahead to 2015 and beyond the prospects for the Irish economy were bright.
“It is likely that Ireland’s standard of living, which is already one of the highest in the EU and indeed the world, will show some further relative improvement in the coming decade,” the report said.
However, it also said Ireland will find it difficult to meet its environmental targets, particularly in the area of municipal waste.
“Although the government has set ambitious targets for limiting the share of waste sent to landfill, policies have not yet been put in place to make sure that those targets are met.
“Meeting those targets would require substantial changes, and the incentives to induce such changes are not yet in place.”
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